Lawyers for BP, Transocean and the insurance companies that cover them are debating who is responsible for upwards of $750 million in damages in the multidistrict litigation (MDL) surrounding the BP oil spill.

U.S. District Judge Carl Barbier heard arguments on behalf of the defendants who owned and operated the Deepwater Horizon oilrig and their insurers during a BP status conference Friday.

At issue is whether BP is considered to have been "grossly negligent" in ways that led to the oilrig explosion. BP has filed a declaration of coverage against Transocean, the owner of the Deepwater Horizon, and its underwriters.

Despite several motions by BP and Transocean filed in the BP MDL regarding insurance coverage, Transocean attorney Steve Roberts said that insurance disputes are subject to arbitration, and will likely be settled out of court.

Transocean's underwriter's attorney Marty McCloud said they disagree that they should indemnify BP for the destroyed oil rig.

"Negligence can affect coverage," he said.

Despite their disagreements, McCloud said he and BP's representatives had "a productive" conference call and will draft a case management order for Judge Barbier to sign by the March 25 status conference.